Why Are Asian Wealth Managers Wary of Digital Assets?

  • A study by consulting firm Accenture revealed that many of these companies still have a few reservations about investing in digital assets.
  • Although the demand for these products has grown significantly in recent years, most of the companies consulted have no plans to offer these products.
  • Digital assets represent a $54 billion income opportunity for investors, the consulting firm noted.

Despite growing demand for digital assets in Asia and around the world, wealth managers in the region are being extra cautious about offering such products to their wealthy clients, a survey by Accenture has revealed.

The Ireland-based consultancy’s study published on Monday indicated that wealth managers are not offering cryptocurrencies, NFTs, Bitcoin futures, and other digital assets, because they still do not fully understand these investment options.

Although the crypto industry has grown rapidly since the start of the pandemic, driven in part by the gigantic stimuli injected into the economies of the most industrialized countries, global banks have been very cautious about this type of investment.

Accenture reported the results of the study that have to do with strategic consulting, technology services, and Accenture’s projections on the future of Asia’s wealth management industry, according to Reuters.

"Currently, 52 percent of affluent investors in Asia hold digital assets of some sort. Accenture's research indicates this could reach 73 percent by the end of 2022," the company said.

An Overlooked Income Opportunity

Accenture mentioned that “digital assets represent 7% of surveyed investors' portfolios - making it the fifth-largest asset class in Asia - more than they allocate to foreign currencies, commodities or collectables.”

And it added that despite these figures still “two-thirds of wealth management companies have no plans to offer digital assets.”

Accenture’s report was based on two surveys, one to gauge the opinion of some 3,200 investors and the other to determine where wealth management companies in Asia are directing their investments. About 500 financial advisers participated in the survey. Both studies were conducted between December 2021 and last January.

According to the consulting firm's findings "for wealth management firms, digital assets are a $54 billion revenue opportunity - that most are ignoring."

On the Flipside

  • Some analysts and experts believe that the current market situation is not just a situation, but something deeper.
  • Web3 Foundation CEO Bertrand Perez predicted that the crypto bubble could burst at any moment, dragging 95% of crypto and blockchain projects with it.

Meanwhile Some Banks Have Taken the Initiative

The report explained that “among firms' barriers to action are a lack of belief in (and understanding of) digital assets, a wait-and-see mindset, and - given that launching a digital asset proposition is operationally complex -  choosing to prioritize other initiatives.”

However, some banks in Asia have been working with cryptocurrencies for a couple of years. DBS Group, the largest financial institution in Southeast Asia, launched its own cryptocurrency trading platform in December 2020.

This option allows its corporate clients and large investors various crypto asset trading services for many digital products.

Similarly, Japanese holding company Nomura Holdings announced in May the creation of a digital asset company this year. Thus, institutional investors will be able to do business linked to the exchange of cryptocurrencies and other operations.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

Author

Santiago is a Venezuelan blockchain reporter specializing in economic and financial issues, with special emphasis on stablecoin trading as well as political and regulatory issues related to Latin America. Every day he reviews and analyzes movements in the crypto market to offer readers first-hand information that can help them make sound decisions in the exciting world of crypto.